Wednesday, October 10, 2007

Hillary's "Social Contract"

Every citizen could get a 401(k) retirement account and up to $1,000 in annual matching funds from the government under a plan offered Tuesday by Democratic presidential candidate Hillary Rodham Clinton.

At a cost of $20 billion-$25 billion a year, the plan is Clinton's largest domestic proposal other than her plan for universal health insurance. The New York senator said it would be paid for by taxing estates worth more than $7 million per couple and would help narrow the gap between the rich and those who don't have enough savings for retirement.
As for the retirement accounts, Clinton said during a campaign stop in small-town central Iowa, "They will begin to bring down this inequality that is eating away at our social contract." She said, "This is a major commitment to how I believe we can begin to right the balance again."

She said that for every $7 million estate that gets taxed, at least 5,000 families would receive the matching funds. (source)
Holy Taxes, Batman!!!

First of all, what is this "social contract" to which she refers? I don't remember signing any social contract. Or any other contract with the federal government for that matter (at least since I got out of the Navy).

If she plans to fund 5,000 accounts with $1,000 apiece, that's $5,000,000 dollars. And she plans to do this by taxing one $7m estate. So that estate will have to be liquidated, as it would not be entirely cash, right. And, of course, the capital gains would be paid out of the $2m left to the estate after the government steals confiscates takes the $5m. If half the estate was gains, then, at the 50% capital gains tax under President Clinton, that would be $3.5m in capital gains taxes. So the estate would end up owing the feds $1.5m.

So, Daddy works hard his whole life and invests in his retirement accounts. He dies in a car crash at 62 years old. There is $7m in his accounts.

POOF. Ha, ha, ha. I bet you thought you were getting something, didn't you?

Now, don't forget, some of those accounts were funded with pre-tax dollars weren't they? And, of course, all of the dividends are taxable income. And, when you liquidate, the capital gains are taxed.

Goody, Goody. Now we can fund universal health care also.

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